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TMI Blog2022 (4) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue of eligible of deduction u/s 80IA and 80IB in respect of various units of the assessee including MBF unit which is a subject matter of u/s 263 is not an issue before the AO during the reassessment proceedings The subject matter of the deduction in the reassessment order was the quantum of deduction but not the eligibility of the deduction and even in that case also the deduction pertaining to MBF unit but not other units whereas the revisionary proceedings dealt extensively with the eligibility of the deduction per se maintenance of separate books of accounts change of opinion by the CIT where the Ld. CIT and also the contrary reviews taken by the DRP for the successive assessment years allowing the deduction. The revisionary proceedings cannot go beyond the issue of the reassessment proceedings. In case, if any issue out of the original assessment is to be revised the limitation time for passing of such order would recon from 31.12.2007. Since the issues raised by the Ld. CIT in the order passed u/s 263 do not emanate from the assessment order dated from 04.03.2013, we hereby hold that the order of the Ld. CIT has not been held to be legally valid. Appeal of assessee allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al justice, is illegal and bad in law. 1.7 That on the facts and circumstances of the case and in law, the impugned order dated 27.3.2015 passed by the CIT without disposing of the legal objections by passing a separate speaking order, is illegal and bad in law. 2. That on the facts and circumstances of the case and in law, the CIT erred in holding that reassessment order dated 4.3.2013 passed under section 147/143(3), was erroneous and prejudicial to the interests of the Revenue on the issue of claim of deduction under sections 80- IA and 80-IB of the Act. 2.1 That the CIT erred on facts and in law in holding that the appellant did not maintain separate books of accounts in respect of eligible unit(s), which is a condition precedent for allowing deduction under sections 80-IA and 80-IB of the Act. 2.2 That the CIT erred on facts and in law in alleging that the appellant failed to furnish various details/ documents and/or leveling various false/ baseless allegations, merely to justify exercise of revisionary jurisdiction under section 263 of the Act. 3. That the CIT erred on facts and in law in exercising revisionary jurisdiction and in holding that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , amend or vary the above grounds of appeal on or before the date of hearing Brief Facts: 3. The Assessee is a public limited company engaged in the business of manufacture/ generation of steel, power, iron, pig iron, sponge iron, etc. For assessment year the year under consideration, the Assessee filed revised return of income on 30.03.2007 declaring income of ₹ 92,06,88,890 after claiming following deductions under sections 80-IA and 80-IB of the Act: S. No. Particulars Amount (Rs.) 1. Deduction under section 80IA of the Act in respect of various independent/ eligible power generating undertakings 196,70,79,113 2. Deduction under section 80IB of the Act in respect of MBF unit 41,20,57,046 3. Deduction under section 80IB of the Act in respect of other independent/ eligible units 16,92,26,199 Total 254,83,62,358 4. The aforesaid deductions claimed under sections 80-iA and 80-IB of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tribunal, which were decided vide order dated 06.03.2014. 8. In the meanwhile, reassessment proceedings for AY 2005-06, were initiated by the AO vide notice dated 23.03.2012, issued under section 148 of the Act. The AO, thereafter, proceeded to complete reassessment vide order dated 04.03.2013 reducing the amount eligible for deduction in respect of MBF units to ₹ 32,36,61,107 from ₹ 41,20,57,046/- on the ground that accumulated losses upto AY 2004-05 amounting to ₹ 8,53,95,939/- were required to be reduced for working out the allowable deduction u/s 80IB.. 9. The Assessee challenged this order before this Hon ble ITAT. The ITAT vide order dated 08.06.2018 set aside the order of the CIT(A) and remanded it back to the file of the CIT(A) to adjudicate the initiation of 148 proceedings. Impugned revisionary proceedings u/s 263: Subsequently, the Ld. PCIT, issued notice dated 22.10.2013 under section 263 for assessment year 2005- 06 proposing to revise the reassessment order dated 04.03.2013. 10. In the said show cause notice, it was primarily stated that from the records, figure of losses in respect of MBF unit for the assessment years 2003-04 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration. Finally the Ld.PCIT passed order dated 27.03.2015 under section 263 of the Act. 12. We find delay in filing of the present appealis owing to the appeal filed by the assessee before th Hon ble High court by way of alternative remedy before Hon ble Court. Arguments of the Assessee 13. Revisionary order u/s 263 - barred by limitation: In the guise of revising reassessment order dated 04.03.2013, which was passed under section 147 on the limited issue of quantum of deduction under section 80-IB only in respect of MBF unit, the CIT passed order under section 263 of the Act on issues arising out of the original assessment order, which is clearly without jurisdiction and bad in law. It is further submitted that original assessment was completed vide order dated 31.12.2007 and consequently, the time limit for revising the said order under sections 263(2) of the Act, expired on 31.03.2010. The issue of eligibility of deduction under sections 80- IA and 80-IB in respect of various units of the applicant (including MBF unit) was, it is submitted, not at all subject matter of dispute in the reassessment order. In reassessment order dated 04.03.2013, the only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Co. Ltd: 330 ITR 568 (Mad). (Pg. 45-49 CLC) It is important to mention a recent decision of Indira Industries vs. PCIT, Madras High Court ([2018] 95 taxmann.com 292 (Madras)) has followed the said Supreme Court ruling and has stated that initiation of 263 proceedings is illegal and bad in law. Reliance was also placed on the decision of Allahabad High Court in the case of L.G. Electronics India (P.) Ltd. v. PCIT: 388 ITR 135 in a writ petition challenging validity of notice under section 263, been held that notice under section 263(1) of the Act has been issued with reference to a discrepancy occurred in original assessment order and it has nothing to do with reassessment order, limitation would run from date of regular order of assessment and not from date of reassessment order. The Delhi Bench of the Tribunal in the case of Prosperous Buildcon Pvt. Ltd. vs. Pr. CIT - ITA No. 2648/Del/2016 has taken the similar view. It has similarly been held in the following decisions: AshokaBuildcon Ltd V. ACIT: 325 ITR 574 (Bom) CIT vs. Lark Chemicals Limited: 230 Taxman 305 CIT vs. ICICI Bank Limited: 343 ITR 74 (i) Claim of deduction u/s 80-IA/ IB already a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration, the AO after due application of mind, and after detailed examination and verification, partially allowed the claim of the Assessee, in the original assessment order dated 31.12.2007. The same is evident from the replies filed by the Assessee and the order passed by the AO. Hence, the same cannot be subject matter of 263 proceedings now. The fact that the claim of deductions under sections 80-IA and 80- IB were verified by the AO is evident from discussions in the original assessment order dated 31.12. iv. Reassessment order neither erroneous nor prejudicial to the interests of revenue- twin conditions not satisfied 20. The scope of provisions of section 263 of the Act is no longer res-integra. The Commissioner can, revise an order of assessment only if it is erroneous and prejudicial to the interests of Revenue. The two conditions must be cumulatively satisfied. Reference, in this regard, may be made to the following decisions: Malabar Industries Co. Ltd. vs. CIT 243 ITR 83 (SC)- Pg. 58- 62 CLC CIT vs. Max India Limited: 268 ITR 128 (P H) [affirmed in 295 ITR 282 (SC)] Hari Iron Trading Co. vs. CIT: 263 ITR 437 (P H) CIT v. Kwality Steel Suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparate books of accounts for eligible undertaking in conventional form. It is submitted that since the DRP had already decided the issue on the merits of the case, the order passed under Section 263 of the Act is illegal, bad in law and without jurisdiction. In AY 2013-14 the Assessee had filed objection before Hon ble Dispute Resolution Panel ( DRP ). Considering the merit of the case the DRP had given its finding on the issue as follows; 2.4.5 On perusal of the above provisions of law it is apparent that there is no imbargo on the claim of deduction in a case where power generated is used captively, and there is no mandate to maintained separate books of accounts. The only mandate of law is that the profits and gain of an eligible business ... shall .. be computed as if such eligible business were the only source of income of the assessee ... (sub-section 5 of s. 80IA) and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant, i.e. in Form-1 OCCB [to be furnished electronically as per Rule-18BB8(12)(2)], Thus, the basic premise on which the deduction claimed has been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed addition of the entire amount of deduction claimed of ₹ 483,06,62,4577-. We have dealt with this matter in details in our Directions for AY 2013-14 dt. 24.09.2018 at paras-2.4.1 to 2.4.7 pages-5 to 15. There being no reason to differ, following our directions in AY 2013-14 the AO is directed to delete the proposed addition. Further, he has followed the direction of AY 2013-14 AY 2014-15 in the AY 2015-16 as well and pass the order vide dated 18,h Sept 2019. The Relevant extract of the order is reproduced as under: DRP Directions: 16.1 The facts of the matter are similar to that in the case of the assessee in AY 2013-14 considered and decided by us vide our Directions dt. 24.09,2018. In this year the AO has dealt with the matter at pages-3 to 113 of the assessment order wherein he has reproduced the assessment order of AY 2011-12 at pages-4 to 111. Even the concluding part in para- 4.2.12 at pages-111 to 113 is verbatim the same as at para-5.16 pages-99 to 101 of the draft assessment order for AY 2011-12, and the observation at para- 4.2.12(vii) regarding DRP s direction in AY 2013-14 is the same as that in AY 2014-15. The AO has proposed addition of the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be followed even on the principle of consistency. Specific Queries with regard to the unit wise accounts maintained by the assesse was asked by the AO and find mention in the assessment orders of various years. The assesse has submitted on various occasions - Form No. 10 CCB for power undertaking eligible for deduction and unit wise books of account for each undertaking. Assessee has specifically submitted in reference to the above-mentioned assessment years that deduction u/s 80IA of the Act was framed on the basis on separate books of accounts maintained at all the locations, where from specific profit and loss accounts were prepared for said units. In this regard, reference is made to submission dated 23.08.2004 for AY 2000- 2001, submission dated 21.05.2002 for AY 2001-2002 and submission dated 11.03.2004 submission dated 05.04.2005 for AY 2003-2004 submission dated 26.04.2006 for AY 2004-2005 and submission dated 22.01.2007 for AY 2006-07 submission for AY 2007-08 and submission for AY 2008-09 .It is therefore, submitted that the issue in regard to the maintenance of separate books of accounts has been examined by department in earlier and subsequent years. However, no disall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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